For example, the TCJA generally eliminated the deduction for any expenses related to entertainment, but businesses can generally still deduct 50 percent of the cost of business meals
. So if you take a client to a baseball game, the cost of the tickets may not be deductible, but a portion of the hot dog lunches you bought may still be written off.
Q: Can I still deduct business meals
and entertainment expenses?
In Notice 201876, issued in the second half of last year, the IRS clarified that such business meals
generally remain 50% tax deductible.
According to the IRS, the amendments specifically deny deductions for expenses for entertainment, amusement, or recreation but do not address the deductibility of expenses for business meals
. This omission has created confusion in the business community, which the IRS addressed in this interim guidance.
Small business owners especially should ensure they have adequate substantiation for expenses such as travel miles, business meals
2018) provides transitional guidance on deducting business meals
expenses under IRC See.
- Prior to the TCJA, companies could deduct 50 percent of entertainment expenses as well as 50 percent of business meals
Perry said business meals
have to be "ordinary and necessary" as part of any deduction.
"But in general business meals
with business associates, someone I work with, an attorney from another firm, clients or customers or prospects, they are not deductible anymore.
That included more than $1.3 million in charges for "questionable or prohibited travel-related expenses." Half of those expenses were charged by a lone consulting firm "for items such as a spa service, alcohol, first-class travel, limousine services, receipts in foreign currency, and business meals
that were prohibited or not fully substantiated."
The deduction for entertainment expenses has been eliminated, although the 50% deduction for business meals
continues to apply.